Into a new dimension

Boldly adding academia to the entrepreneurship game plan

A new layer in the entrepreneurship ecosystem is taking shape through the increasing institutional presence of academic bodies, including both top-tier and less prominent universities in Lebanon. Universities have been linked locally to entrepreneurship in the past, but this link was often feeble and limited to teaching a few courses or having an occasional conference. Now, the bond between academia and the ecosystem seems bound to become tighter and take on the structure of intense and mutual interaction as described by American University of Beirut professor and entrepreneurship expert Salim Chahine. “Entrepreneurship as an ecosystem requires a triple helix where you have close interaction between the government, industry and the universities,” he says.

Two Beirut-based universities with advanced plans for rolling out their entrepreneurship centers are AUB, which has a project to inaugurate an innovation park by early next year at the latest, and the École Supérieure des Affaires (ESA), which already has established – in preliminary form – an entrepreneurship center under the name of SMART ESA. SMART ESA was created in Spring 2016 and is currently based in two rooms of ESA’s main building.

“The education and business environments have been changing for the past four years but they are not yet designed in a way to cater to a young person to go out and engage in entrepreneurship,” says Omar Habib, the new head of SMART ESA. ESA’s goal of institutionalizing entrepreneurship within the school has led it to embark on a year-long planning process that will develop an old building on ESA’s grounds into a permanent entrepreneurship center.

The new entrepreneurship center building is part of the historic French embassy compound and will be named after former Lebanese Prime Minister Rafic Hariri. A cornerstone laying ceremony for the center was held in May and excavation works for creating a new building inside the shell of the old one are scheduled for December or January, Habib says. According to him, the building already has a nickname: the SMART building.

The AUB Innovation Park will incorporate as a separate entity from the university and look to find a permanent location off campus. However, in the early stages of its existence, it will use AUB campus facilities for its activities, which will include acceleration programs. The park will seek to utilize AUB’s strong network with industry to build a competitive edge. “All accelerators are working on streaming and supporting, training and mentoring, helping ideas becoming startups. We will do the same thing and we will try to help them grow faster with our corporate network,” says Chahine, who is slated to be the director of the AUB Innovation Park.

Coy on details

When asked about details of SMART ESA activities, Habib coyly suggests waiting until the BDL Accelerate event in early November, when the entrepreneurship center is scheduled to announce its programs and open registration for startups. He disclosed that SMART ESA will seek to incorporate as a business because it wants to tap into funding under Circular 331 and that it has recently signed partnership agreements with a French specialist operator of accelerators and incubators.

“We will have an ideation level program, with sublevels, an incubation level program, an acceleration level program, and an a la carte offer of programs that are according to needs, because startups do not get all that they want from preset programs. Where we want to shine is in helping startups learn something and helping them to meet people,” Habib says.

Shahine and Habib are not ready to discuss numbers and budgets, but both university projects will likely run up millions of dollars in investments. What makes the projects of SMART ESA, the AUB Innovation Park, and plans related to entrepreneurship by other universities noteworthy, however, is the shared desire of higher education institutions to contribute to the entrepreneurship culture in Lebanon.

According to Habib, many families are still ruled by the paradigm of favoring a secure job for their children of university age, and entrepreneurship presents inherent risks for fresh graduates. However, this is not fully timely anymore. The hunger for Lebanese talent by countries in the Gulf is no longer what it once was, and the local market for jobs has been very restricted for several years now.

[pullquote]Entrepreneurship is something that every student can learn, as opposed to a talent which only a few people are born with[/pullquote]

Entrepreneurial activity is the only path that is open to many graduates if they don’t want to accept working for years as interns with a pittance of decisionmaking power and even less remuneration, says Ralph Khairallah, who is an entrepreneurship instructor at the Université Saint-Esprit de Kaslik (USEK). Khairallah teaches his students that if a country is going through a depressed economic phase, this is the best moment to start entrepreneurial activities. He says that through his teaching, he has validated his thesis that entrepreneurship is something that every student can learn, as opposed to a talent which only a few people are born with. His motto is that one can “make the world a better place – one entrepreneur at a time.”

USEK plans to open an entrepreneurship center in Kaslik, with the university being close to launching something that will provide entrepreneurship hosting options as an alternative to venues at universities in Beirut. “We want to own entrepreneurship,” Khairallah says proudly.

There is no single answer to fostering entrepreneurship, but Lebanese universities are keen to try approaches that will offer better opportunities for their students, says Hiba Othman, who coordinates the entrepreneurship project at the American University of Science and Technology (AUST). The university is pursuing a new initiative to introduce students to entrepreneurship through a learning-by-doing approach, and this year it embarked on a program that it wants to develop into a tradition for future semesters.

“The rationale behind this entrepreneurship program is that we want to build this culture for our students and encourage them to build their own companies, because the job market nowadays is very small and people cannot find jobs as they used to. The youth have a lot of ideas, more than we have, and given the right tools, they can start their own projects, and these can be successful projects,” Othman elaborates.

Student teams are formed and mentored by senior faculty members, but the mentorship does exclude commenting on the students’ business plans or pointing out design errors. The teams, whose only requirement by the university is to be multi-disciplinary, are equipped with $2,500 in seed money and tasked with preparing products that will be presented at a business plan competition later this year. The university focuses this program entirely on its students and does not look to faculty members to offer ideas or present their own entrepreneurial plans.

Another university with plans to establish an incubator in the near future is the Modern University for Business and Science (MUBS). Like AUST, it is a university that was founded recently with the eventual goal of competing with the major universities in Lebanon: AUB, the Lebanese American University andUniversité Saint Joseph (USJ).

MUBS first acquired experience with entrepreneurship activity through Tempus, a European Union program supporting modernization in partner countries, which ran from 2010 until 2013 at the university. The program illustrated that there was great interest in entrepreneurship among the students, says Latifa Attieh, chair of marketing and management. “The first thing that comes to the mind of most of our graduates is building their own enterprise. From this, we got the idea that it is essential to embed entrepreneurship education in higher education and also in schools; we have to start from an early age, because entrepreneurship is a culture,” she explains.

According to the dean of the International School of Business at MUBS, Guitta Abou Khalil, the university administration is working on the creation of an incubator at a training facility, which MUBS operates in Jal El Dib. This project is currently in the planning stage and details will be announced later. “MUBS has plans to roll out an incubator by the start of 2017. It will be before the next startup competition, which will take place in February,” she says.

Many iterations of academic entrepreneurship

The first steps into entrepreneurship taken by Lebanese universities date to the 1990s, when the Lebanese American University inaugurated the Institute for Family and Entrepreneurial Business at its Byblos campus and USJ set up the Berytech Technopole adjacent to its science and technology campus overlooking Beirut in Mar Roukos. This was followed by courses, conferences and competitions on startup ideas and entrepreneurship at AUB and other universities. However, the outcome was not strong in terms of students and fresh graduates jumping straight from university into launching their own companies, many experts on the entrepreneurship ecosystem tell Executive, including Chahine and Nicolas Rouhana, who was director of business incubation at Berytech and is today general manager of the IM Fund.

This time around, however, the iteration of the idea of linking academia more effectively with business and entrepreneurship looks to be better positioned, as the entrepreneurship ecosystem has been nurtured for some years now from the financial, industrial acceleration and incubation angles. The angles under which financial and corporate players view entrepreneurship are viable, but differ substantially from the long-term, community-centric approach taken by universities like AUB. As Chahine points out, AUB will foster entrepreneurship under a time-honored educational and societal mission. “AUB’s goal has always been to impact the community; we will be a good collaborator with other entities in the ecosystem. That is our mission,” he says.

[pullquote]The interaction between academia and national interests also has the potential to address another towering need in the Arab region: research and development[/pullquote]

The proof of the value of interaction between academia and entrepreneurship dates back to the 1950s and to the place that still today is hailed as the global symbol of tech entrepreneurship: the area around Palo Alto, California. It stands to reason that the tech industry hub known as Silicon Valley had to emerge somewhere because the new tech industry of the postwar era needed to find its location. But a factor that was instrumental in pulling it into Northern California was the combination of entrepreneurship, venture capital, research and academia that was created when Stanford University established an industrial park and encouraged close interaction between professors (who could take on corporate work as consultants) and young companies that took up residency in the park (some of which could send qualified employees to take classes at the university). The magic of Silicon Valley has proven resilient to attempts of decoding or copying its successful formula, but one can surmise that the intense interaction between academia and industry was a part of the recipe.

The interaction between academia and national interests also has the potential to address another towering need in the Arab region: research and development (known as R&D). R&D was fostered by Stanford through the creation of a research park, and it played a key role in the development of Silicon Valley. For Lebanon’s future, it will be vital to develop R&D with the participation of academic institutions and with infusion of substantial funds, says USEK’s Khairallah. “[Facilitation of loan guarantees under] Kafalat was the big bang for hospitality and tourism ventures in Lebanon; [funding under] Circular 331 is the big bang for the tech startup ecosystem. We need a big bang for research,” he tells Executive.

According to him, R&D will create returns for the country and Lebanon could develop a triangle between entrepreneurship, academic excellence and research. “We have good entrepreneurs, we have the academic institutions, but we do not have the resources to do research and development. We need to create an ecosystem for research,” Khairallah says, noting that large research universities in the developed world have huge endowments or funds that are sustaining their R&D.

Being more involved with the entrepreneurship ecosystem will also have an impact on the universities. The next generation of young students could differ greatly from the past. “It will be a challenge for universities to adapt and that is why it is important for an entrepreneurship center to be its own entity. That also means that it needs to be a partner to the entire university, from top to bottom [of the administration and faculty], not just with the students,” he observes.

Changes are evident for Chahine in the Arab region, including increasing education levels and new realities at the workplace. He sees the way forward in terms of collaboration with other Lebanese and Arab universities. “Lebanese are not having the same space [to move into regional employment] as they had in the past, but AUB still has its presence in the region and we are still a leading research entity in the Arab world. We hope that we can collaborate with other Arab universities on initiatives such as acceleration programs that will create more and more entrepreneurship; all of us can be entrepreneurs,” he says.

When one broadens the view beyond the budding entrepreneurship ecosystems in Lebanon and the Arab region, the question that concerns academia is how to design entrepreneurship centers and programs to nurture talent so that these centers and programs will survive beyond the current period, which is characterized by an economy-wide infatuation with tech entrepreneurship.

[pullquote]Circular 331 is the big bang for the tech startup ecosystem. We need a big bang for research.[/pullquote]

This concern is driven by the cyclicality of education. Popular areas of study are becoming saturated within a few semesters, producing more graduates than the market can absorb. This problem is potentially exacerbated by globalization of education, which is reflected in a glut of popular programs that lead to supply bulges in several countries simultaneously. Internationally, entrepreneurship may be a candidate for such an unwelcome development. It has already been speculated that entrepreneurship degrees are what MBAs were 20 years ago: degrees in which scores of people invest in vain because they hope that they will secure their future.

The danger for this in the Middle East may be remote and could be overlooked when one only focuses on the difference between local universities and those in markets where institutions of higher education have had entrepreneurship programs for years. Judging by the university rankings for entrepreneurship programs compiled by the French higher education consultancy Eduniversal, these markets are the United States and Western Europe.

Entrepreneurship is one of 17 masters programs for which Eduniversal has put together a global ranking containing either top 50 or top 100 programs. According to the methodology described on the consultancy’s best-masters.com website, ranks are based primarily on three equally weighted factors: reputation among recruiters, starting salaries of graduates and satisfaction of graduating students. The reputation and satisfaction scores are survey based.

According to the Eduniversal list, the US is home to a quarter of the top 100 entrepreneurship masters and another quarter of schools are based in Western Europe. The Middle East has three programs on the list, if one includes the country to Lebanon’s south. The program at the University of Tel Aviv is highest ranked in 25th place and another program at Ben-Gurion University of the Negev is ranked 88th. The sole program from an Arab country is Beirut-based USJ’s Professional Masters in Entrepreneurship and Technologies in 73rd place, which is one of five professional masters offered by USJ’s business department.

While global trends should be paramount on the minds of Lebanese university administrators and entrepreneurship program managers when they are thinking a few generations ahead, it is positive for the near future of our ecosystem that the odds for institutionalization of entrepreneurship in Lebanon’s academic realm are increasing and entrepreneurship is being enriched by institutions like SMART ESA which, as Habib says, “want to develop programs that are flexible and will answer the needs of people who don’t even know yet what their needs are.”